The world market leader for assembly and fastening materials is feeling the weaker demand from the construction industry.
(Photo: Andreas Lechner/ PR)
Stuttgart The weak economy and high raw material costs are dampening the momentum at Würth. In the first half of the year, the sales of the world market leader for assembly and fastening material grew by 5.9 percent to 10.5 billion euros, as the company announced on Monday.
“We feel the economy slowing down: after two years with record sales and operating results, the economy is now cooling off,” said Würth CEO Robert Friedmann. In the first quarter, growth was still 9.3 percent.
After almost three years of the corona pandemic and the associated supply chain problems, the supply situation is easing. In Europe, however, high interest rates and costs primarily depressed demand from the construction industry, which is important for Würth. “The bottom has not yet been reached in the construction industry,” said Friedmann.
Würth: Operating profit falls in the first half of the year
In addition, many companies reduced their buffers in the warehouses. The car industry, which Würth supplies with small parts, is also recovering more slowly than expected in Europe.
The operating profit of the family company was now declining overall after an increase of 2.3 percent in the first quarter. After six months, the operating result fell by a total of 40 million euros to 680 million euros. In addition to higher personnel expenses, Friedmann cited increased costs for mobility and maintenance as well as price pressure as the reason.
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The individual divisions gave a two-part picture: According to Friedmann, the electrical wholesale trade seamlessly continued the successes of the past year and grew by 17.3 percent in the first half of the year. This industry continues to benefit from the boom in renewable energies, especially in photovoltaic systems. The chemicals division with cleaning agents and adhesives also continued to grow strongly.
Online trade accounts for a quarter of sales
On the other hand, electronic components, fittings production and the trade business unit felt the effects of the global economic slowdown.
Overall, Würth remains cautiously optimistic for the second half of the year. “As long as the economic and geopolitical conditions do not deteriorate drastically, we expect mid-single-digit sales growth and a slight decline in operating profit,” said Friedmann. The revenues of the company, which owner Reinhold Würth expanded into a global corporation, are likely to exceed the 20 billion euro threshold for the first time this year.
Online trading is becoming increasingly important for Würth, with sales increasing by 15.2 percent compared to the previous year. This now accounts for almost a quarter of total sales.
The number of branches where craftsmen pick up their goods themselves rose by 103 to 2,627 worldwide. More than 40 percent of sales now come from this distribution channel. Würth also intends to make greater use of artificial intelligence in administration and logistics in the future in order to increase efficiency.
According to company boss Friedmann, Würth remains a job engine: A total of 1409 new employees were added to the group in the first half of 2023. Friedmann wants to increase this number to 3,000 by the end of the year. The group currently employs 87,046 people, 43,859 of them in sales.
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